Things to Consider Before Investing in Publicly Listed Casino Companies

Any investor looking to diversify their portfolio is always going to consider the risks involved in new assets. With many of the world’s highly profitable casino entertainment groups now public, one may wonder whether these represent a lucrative opportunity or are too bogged down by red tape. In this guide, we’ve shared the pros and cons of casino investment.

The Strength of the Gambling Sector

There has long been a belief that the gambling industry is recession-proof, which for investors, seems too good to be true. But with the online gaming sector in particular showing considerable growth, a more competitive market has emerged. Some companies have leveraged this to build a stable grounding, while others have folded to mismanagement or unsustainable growth.

In any case, customers are flocking to online gambling sites in record numbers, with endless releases of new titles and innovative technologies ensuring a dynamic market. For example, online casino sites incorporate top-quality software which power a robust catalogue of popular slots and table games to ensure you can play live casino without technical disruptions. It’s adaptive companies like this that offer particularly lucrative investment opportunities.

The Market’s Steady Growth

As one of the top online gambling regions in the world, the UK is home to massive gambling conglomerates such as Flutter Entertainment. These companies are predicted to generate over £16 billion in 2024, with revenues forecast to rise 1.2% annually. However, it is the US market that shows the most promise.

The United States’ burgeoning online gambling market has experienced consistent revenue growth due to the expansion of legalisation in sports betting and online casinos. Revenues in July 2024 rose by 3.1% year-over-year, representing the 41st consecutive month of annual growth.

This is despite many other sectors stalling during a global cost of living crisis. Two major companies that have experienced considerable growth are MGM Resorts International and Caesars Entertainment, whose property portfolios include some of the most recognisable gambling brands in the world.

Consider the Financial Metrics of Each Company

New investors will need to look beyond a company’s public reputation when deciding to invest. Instead, they should focus on their revenue growth, as well as reports on any planned mergers or acquisitions. Due to the capital-intensive nature of casinos, the businesses’ debt loads can also be significant, so their future growth initiatives are instrumental in weighing their value.

There has also been a steady decline in revenues at land-based casinos reported in both the UK and the US, so considering a company with a strong online presence is worthwhile.

Investment in Casino Technology

The adoption and development of new technologies have been instrumental in the growth of online casinos. Many companies are now acquiring software and product developers to ensure innovation, opening up potential new revenue streams with product licensing. It’s important to consider companies that have proven adept at acting on these opportunities as well as meeting the challenges posed by digital entertainment.

Investment Risk Factors

The biggest risk to investing in the gambling industry is the changes in social and political attitudes toward the activity. In the USA, in particular, each state has its own approach to the industry, which has the potential to create inconsistencies. However, this brings the added benefit to investors in that the market is well scrutinised.

Should I Invest?

As we’ve explored, the gambling sector offers great opportunities for investors provided they consider certain factors. A company’s online strategy will be instrumental to its future success, as well as its versatility in adapting to different markets. Investors must take into account companies’ property and technology assets too, as well as their debts, to gauge their sustainability.